Nonfarm Payroll (NFP) Risk Management Solution

Risk management is a big part of your operations. That is particularly true around major economic releases such as the Nonfarm Payroll. Risk management around these events is crucial.

The US Bureau of Labor Statistics releases the nonfarm payroll report, which tracks the growth in new jobs in all non-agricultural businesses and is one of the key releases on the economic calendar.

The NFP report comes out on the first Friday of every month and measures labor force statistics for the preceding month. For example, this month’s NFP is due tomorrow, October 7th, and will track job growth excluding farm workers in September versus August.

The NFP numbers are considered a high-volatility event and can influence major instruments, mainly the USD and Gold.

As a high-impact event, most retail forex traders follow the NFP report. As a result, your brokerage needs a robust nonfarm payroll risk management system.

As one of the most closely followed reports, the NFP lies at the heart of many auto-trading strategies and trading robots. Developing an auto-trading system based on the unemployment rate and nonfarm payroll figures wouldn’t be difficult. The parameters are relatively simple. While we won’t touch on the potential accuracy of any such auto-trading systems, we will go into the trading risk management side.

We’ve already touched on the high-volatility nature of the event. For example, a Bearish or Bullish payroll number can impact trading volumes and direction for major currency pairs and the broader financial markets. So, as with any high-impact event, the day’s motto is “be prepared.”

Your nonfarm payroll risk management needs to take a proactive approach. If you’ll pardon the pun, there’s no point in closing the stable door after the farm horse has bolted. So risk management has to be proactive.

One tactic is trying to react to the NFP data instead of preparing for any eventuality. We wouldn’t suggest it, but it is one way to go. Good luck if you decide to try it, by the way.

A better way would be to use a solution that has proactivity built in already. That’s a perfect segway to the PLUGIT Dynamic Margin Module.

As with all our products, our Dynamic Margin Module uses intelligent automation to help you manage your trading risk. The module integrates directly with your MT4 and MT5 platforms and lets you create multiple margin profiles per account or instrument basis.

The module supports all order types, including open, pending, and hedged orders, for the ultimate flexibility when calculating necessary margin levels.

Our Dynamic Margin Module is rule-based, so when the NFP is due, set your rules, and your nonfarm payroll risk management policies will come into play on the first Friday of every month. Like clockwork!

We all need a helping hand from time to time. Risk management isn’t something you can leave to chance, and hope it works out fine. You have to have a tried and tested solution in place.

Our Dynamic Margin Module does all the heavy lifting for over one hundred of the leading brokers in the world. It is a robust and efficient solution to all your risk management, including nonfarm payroll risk management!

Drop us a line today, and we’ll arrange a no-obligation demo of the product to show you what we can do for your business.